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By: Patrick Romanoski
I recently heard on the radio that PSE has given Glendale until Wednesday to decide on the $50 million offered as a ‘cure’ to the arena lease, good. By then they may all start to realize that Jim Balsillie doesn’t play softball, and they all stand to lose a fortune should Baum give Moyes equal weight as an unsecured creditor.
That is the big mistake the unsecured creditors have made.
Commissioner Gary Bettman has persuaded them that Judge Redfield T. Baum will take his word that Jerry Moyes deserves less. The funny thing is, the NHL forgot to bring any evidence to prove their point, only their opinion.
In a run of the mill bankruptcy case all of the money owed is not usually there to give out. In this case Balsillie is making Moyes claim (and all the unsecured creditors) whole or virtually so. He is putting in the money Moyes LOANED to the team. The unsecured debtors, in supporting the NHL bid, are setting themselves up to be plucked like a banjo (played) by Bettman when they don’t have to. Go ahead and take 40 cents on the dollar, but why turn down 99 cents?
The PSE bid offers to cover any interest lost if its victory is held up in litigation, another guarantee. Don’t be fooled by promises of more contracts with the team, it will move or it will fold soon. The next time you are left holding the bag you may find it empty, adios.
Redfield T. Baum can decide that Moyes is a valid creditor and has given every indication that is his concern. He sees that perhaps, for one of the few times in his career, he has the funds at his disposal to wipe out virtually every debt. The appeal of that should not be brushed off lightly.
There are only two (2) choices for him to make, the primary one is if Moyes loan was indeed a loan. If he decides it is not a loan then the NHL is most likely the victor. He has to assume it is a valid loan since no one has proved otherwise. Merely, “cherry picking” & opining means nothing to one such as Baum. As a master of his trade, he will be dispassionate & calculating in how he can financially satisfy all creditors. He understands that this is his job & Jim Balsillie is giving him the necessary tools.
Once he decides that Moyes is deserving, the puny NHL bid means all of the unsecured creditors would be required to take pennies on the dollar. Fortunately he has another option that takes care of all debtors, the PSE bid. While the NHL constitution is the major obstacle, it is not an insurmountable one by any means.
As he noted, it appears that the NHL ‘does not always follow its own constitution’; to a large part Bettman ‘interprets’ it (a comment of his that would be referred back to under any appeal & he knows it). As such, it is no longer “written in stone”. He therefore has the ability to interpret it as he sees fit too. In fact, Judge Baum may even have more rights under bankruptcy law to interpret the NHL constitution than Gary Bettman. He is the one entrusted to interpret law; Bettman is only qualified to give his opinion.
The instances cited of franchises moving (outside the specified parameters of the constitution), being sold to people of questionable character (Boots, Spano, McNall et al), Gary Bettman’s violation of article 6.2, “shall have no financial interest, direct or indirect, in any professional sport.” (40% of his last years income was from NHL merchandise) & other infractions such as the remaining illegal veto clause cry out for Baum’s determination that the Constitution of the NHL is fatally flawed & requires HIS interpretation.
Baum’s statements that he will have “one decision” and that he requires “more time”, bode well. Any decision in favour of PSE requires those very two qualities. A negative decision on Jims bid would not need to be one decision (it could be but doesn’t need to be). & would require little time.
If the result is to be favourable to Balsillie and Moyes, Baum would be required to construct a decision and hone it down to its finest points so that in his own mind it would meet all future challenges. He would build a brick wall around his choices & reasoning. He too realizes that this would be difficult but certainly worth the $100+ million dollars that it would reap.
The NHL has given Judge Baum all of the material he needs to seal the deal. The “bad faith’ of insider bid repercussions, the delays in filing requested information & the uncorrected false allegations by Leipold before the ‘character’ vote can cement his conclusions. If Jim Balsillie accepts a positive ruling without reservation, the team will see Hamilton next season or sooner.
Don’t forget, Balsillie’s bid has much fewer conditions than the NHL bid. A good portion of the NHL bid is merely rolling over of debt and contains no agreement on a Glendale lease, a necessity. Judge Baum will not assign the lease back to Moyes (an NHL condition) because it is at the crux of his losses and must be ‘cured’. The only other ‘cure’ is the 3-year payment cap and is only available to Jim Balsillie.
I am generally of the opinion that the longer it takes for a ruling the more likely it is to be positive. It means that he is trying hard to squeeze as much cash out of this deal as necessary. Your Honor, take all the time you need.